Final Results, Annual Report and Notice of AGM

Fiske (AIM:FKE) is pleased to announce its final audited financial results for the year ended 30 June 2023.

Highlights

James Harrison, CEO, commenting on the results said:

"We are pleased to report a significant improvement in our profitability for the year to 30 June 2023. Following our move to more modern offices and other cost saving initiatives we are pleased with our progress over the year. Markets remain challenging despite some improvements in valuations since 2022. We continue to review our cost base, invest in our people and focus our investment efforts on looking after our clients in these more challenging markets."

Our Annual General Meeting will be held on Thursday 23 November 2023 at 12.30pm at our offices at 100 Wood Street, London EC2V 7AN.

596/2014.

Revenues of £5.9m to June 2023 were up on the prior year equivalent 12-month period and closely matched the 13 months to June 2022 (£5.8m). This was largely due the resurgence of interest income towards the end of the year which countered the slightly lower fee and commission revenues due to the flat UK market.

We remain committed to delivering sustainable profitability for our shareholders whilst maintaining a strong capital position to weather market uncertainties. We are pleased to report our total client assets at June 2023 increased to £807m from £772m in June 2022, which represents an increase of 4.5%.

Costs

Costs have remained stable in the year to June 2023 (£5.8m) and broadly the same as the prior year equivalent 12-month period to June 2022. Overall, we have maintained operating expenses at the same overall run-rate; £5.8m in the year to 30 June 2023 (13 months to June 2022: £6.3m). Staff costs were up by some 6% which reflects both continued investment in growth and inflationary increases in salaries.

During the year, we have benefitted from the lower cost of our new modern premises without the relocation and overlap costs incurred in the prior period.

Outturn

The Group made an operating profit of £128,000 in the year to June 2023 (13 months to June 2022: loss of £505,000). Profit on ordinary activities after taxation was £253,000 for the year to June 2023 (13 months to June 2022: loss of £172,000). The cash flow arising from this is rather better given that there is some £206,000 of phased write down of past goodwill on acquisitions. Meanwhile, the £200,000 dividend income receipt from our holding in Euroclear helped fund the £290,000 acquisition of a customer base.

Euroclear

Euroclear's operating income increased from €1,615m in 2021 to €1,955m in 2022 (after deducting the Russian sanctions impact) and its operating margin increased from 40% in 2021 to 42% in the year to December 2022. Net earnings per share increased 30% to €191.7 in 2022 compared to €147.0 in 2021.

There were several private transactions in Euroclear shares during the year and these have helped us to better assess the appropriate carrying value of our holding in our financial statements. Considering recent transaction prices in Euroclear shares, we have marked the carrying value of our investment down to €1,911.50 per share (2022: €2,050 per share) being £4.3m in total (2022: £4.6m). Our mark down is not a diminution of our assessment of the company but a reflection of recent trades that need to be considered. Our holding continues to represent a significant store of value on our balance sheet and the company paid us gross dividends amounting to £200,000 in the year (2022: £185,000).

Net assets

Shareholder's funds amount to some £8.3m (2022: £8.3m) and within this we now hold some £3.3m (2022: £3.2m) of cash.

Dividend

The Board has resolved not to pay a dividend for the period to 30 June 2023 (2022: £nil).

Staff

We would like to thank all members of our dedicated staff for their continued commitment and hard work. As a company we have continued to evolve, adapt and improve our modus operandi throughout the year.

Board

In August 2023 we celebrated our 50th anniversary and, as mentioned in my last report, as Founder and Chairman I will be stepping down as Chairman at the conclusion of the Annual General Meeting in November 2023 and handing over my investment management responsibilities for clients. The board has elected Tony Pattison as Chairman to succeed me from the conclusion of our Annual General Meeting ('AGM') this year. Tony is a former Chairman of Capital Gearing Trust plc and was the Chairman of Fieldings Investment Management at the time of our acquisition of this company in July 2017. Tony has been a director of the Company since 1 October 2018 and he and I have worked together during the last year of transition to ensure a smooth handover of my clients and the responsibilities of the Chairman.

Strategy

Our commitment to continuous improvement led us to apply significant efforts in fee automation systems over the past year. The improved utilisation of the technology platform in which Fiske has already invested has allowed us to streamline our processes, deliver more automation and enhance our client servicing capabilities.

Looking ahead, we will continue to invest in automation technologies, exploring opportunities to further enhance efficiency and accuracy while maintaining our commitment to transparency.

Our commitment to improving our back-office systems has resulted in more efficient operations, enhanced client services, and reduced risks. We will remain vigilant in this area, continually seeking ways to stay at the forefront of industry best practices.

Succession planning is a key consideration in our recruitment strategy, both for Investment Managers and for our Support and Operations teams. Our acquisition of a customer base in the year to June 2023 was driven by this strategy and we expect to capitalise on this in the future both for client satisfaction and business continuity.

Consumer Duty

The Consumer Duty came into effect on 1st August 2023. Considerable time and effort has been spent implementing the changes required within our business to ensure the new regulations are embedded in our policies and processes. Our Consumer Duty Champion who is also one of our non-executive directors will continue to assist the management team in ensuring that appropriate oversight is maintained as we operate under the new rules.

Markets

At present, stock markets generally, and certainly London and New York, are in a strange period of relative uncertainty which has been the pattern for some months. It is unusual when the outlook for major Western economies is so precariously perched between recession and stagflation. It is rare that no decisive trend has emerged in stock markets at a time when so much is changing in the economic and political scene. We have a serious war in Eastern Europe into which Western countries are being increasingly but decidedly more involved. We have an unstable situation with the China/Taiwan standoff. We have had 18 months of sharp and protracted rises in interest rates in a concerted effort to tame rampant inflation, which is not helped by the situation in Ukraine, and which may not have reached its peak yet in spite of the inevitable optimistic talk amongst the chattering classes. Meanwhile the tragic events unfolding in Israel and Gaza are exerting upward pressure on oil and gas prices with the possibility of military escalation in the Middle East creating further uncertainty. This is all happening when the West has a series of weak and hesitant governments who follow events rather than trying to control them, which is not a good combination. As a result, we are cautious about the immediate prospects for the stock markets this autumn.

Outlook

The financial industry has not been immune from the global economic challenges posed by the current inflationary pressures. While we understand the concerns this raises, we must strike a balance between maintaining our service quality and addressing the impact of inflation on our operational costs.

In light of rising costs, we have conducted a comprehensive review of our fee structure to ensure it remains fair and competitive and have applied revised fee rates from April 2023. We have begun to see the benefits of these new rates in the first few months of the new financial year.

Annual General Meeting

Shareholders are invited to attend the Annual General Meeting to be held at our offices at 100 Wood Street, London EC2V 7AN at 12.30 pm on Thursday 23 November 2023. We would like the opportunity to meet you and for you to meet the management of the Company in which you are invested.

The Board encourages shareholders to submit their votes via the CREST system. Shareholders may also submit questions in advance of the AGM to the Company Secretary via email to info@fiskeplc.com or by post to the Company Secretary at the address set out on page 53 of the annual report.

Consolidated Statement of Total Comprehensive Income

For Year ended 30 June 2023

Other comprehensive (expense) / income

Items that may subsequently be reclassified to profit or loss

All results are from continuing operations.

Consolidated Statement of Financial Position

At 30 June 2023

Notes to the Accounts

For the Year ended 30 June 2023

Basis of preparation

The financial statements have been prepared in accordance with the requirements of IFRS implemented by the Group for the Year ended 30 June 2023 as adopted by the International Financial Reporting Interpretations Committee and in conformity with the Companies Act 2006. The Group financial statements have been prepared under the historical cost convention, with the exception of financial instruments, which are stated in accordance with IFRS 9 Financial Instruments: recognition and measurement.

The financial information included in this News Release does not constitute statutory accounts of the Group for the Year ended 30 June 2023 or 13-month period to 30 June 2022, but is derived from those accounts. Statutory accounts for the 13-month period ended 30 June 2022 have been reported on by the Group's auditor and delivered to the Registrar of Companies. Statutory accounts for the Year ended 30 June 2023 have been audited and will be delivered to the Registrar of Companies. The report of the auditors for both years was (i) unqualified and (ii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

Copies of the Annual Report will be sent on 24 October 2023 to shareholders and will also be available on our website at www.fiskeplc.com

New and revised IFRSs in issue but not yet effective

A number of amendments to existing standards have also been effective from 1 July 2022 but they do not have a material effect on the Group financial statements. There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Group has decided not to adopt early. The following amendments are effective for future periods:

The Group do not expect these amendments to have a significant impact on the financial statements.

There were no new standards adopted in the current financial period.

Total revenue and segmental analysis

Substantially all revenue in the current period and prior year is generated in the UK and derives solely from the provision of financial intermediation.

Tax

Analysis of tax on ordinary activities:

Factors affecting the tax charge for the period

The main corporation tax rate, based on the United Kingdom standard rate of corporation tax, was increased from 19% to 25% from 1 April 2023. The deferred tax liability has been calculated using the expected on-going corporation tax rate of 25% (2022: 25%).

The charge/(credit) for the year can be reconciled to the profit per the Statement of Comprehensive Income as follows:

Earnings per share

Basic earnings per share has been calculated by dividing the profit on ordinary activities after taxation by the weighted average number of shares in issue during the period. Diluted earnings per share is basic earnings per share adjusted for the effect of conversion into fully paid shares of the weighted average number of share options during the period.

Goodwill arising through business combinations is allocated to individual cash-generating units ('CGUs') being acquired subsidiaries, reflecting the lowest level at which the Group monitors and test goodwill for impairment purposes. The CGUs to which goodwill is attributed are as follows:

The impairment charge arises from a prudent assessment that customer relationships and goodwill change over time and are not of indefinite life. Based on analyses of the relevant customer base segments, a determination was made as to the expected income streams arising over the next 6 years. The recoverable amounts of the goodwill in Ionian Group Limited and in Vor Financial Strategy Limited are determined based on value-in-use calculations. These calculations use projections of marginal profit contributions over the expected remaining stream of attributable value. The key assumptions used for value-in-use calculations are as follows:

Had the discount rate used gone up / down by 1%, impairment would have been £8,000 higher/lower and the carrying amount commensurately adjusted. Management determined margin contribution and growth rates based on past performance of those units, together with current market conditions and its expectations of development of those CGUs. The discount rate used is pre-tax, and reflects specific risks relating to the relevant CGU.

Right-of-use assets

Property

A ten-year lease of office premises at Salisbury House came to an end at December 2021 after a 12 month extension. Since then the Company has moved to new office premises commencing a new lease to 21 February 2025.

The Group used the following practical expedients when applying IFRS16 to leases previously classified as operating leases under IAS17.

• Applied a single discount rate to a portfolio of leases with similar characteristics;
• Other intangible assets

Systems licence

• Investments held at Fair Value Through Other Comprehensive Income

The investments included above are represented by holdings of equity securities. These shares are not held for trading.

Trade and other receivables

Trade receivables

Counterparty receivables

Included in the Group's counterparty receivables balance are debtors with a carrying amount of £230,000 (2022: £407,000) which are past due but not considered impaired.

Ageing of counterparty receivables:

†The lease liability is retired over time by the contrasting interest expense and lease payments.

Deferred taxation

Deferred tax assets and liabilities are recognised at a rate which is substantively enacted at the balance sheet date. The rate to be taken in this case is 25%, being the anticipated rate of taxation applicable to the Group and Company in the following year. A potential deferred tax asset of £156,000 relating to trading losses arising before 1 April 2017 has not been recognised.

Called up share capital

Included within the allotted and fully paid share capital were 9,490 ordinary shares of 25p each (2022: 9,490 ordinary shares of 25p each) held for the benefit of employees.

At 30 June 2023 there were 125,000 (2022: 125,000) outstanding options to subscribe for ordinary shares at a weighted average exercise price of 70p (2022: 70p) and a weighted average remaining contractual life of 1 years, 6 months. (2022: 4 years, 7 months). Ordinary shares are entitled to all distributions of capital and income.

Financial commitments

Lease - classified as an IFRS 16 lease

On 31 December 2021 a 10 year lease over the Company's premises at Salisbury House expired. In September 2021 the Company entered into a lease over new premises at Wood Street for a period of some 3 years to 21 February 2025.

Clients' money

At 30 June 2023 amounts held by the Company on behalf of clients in accordance with the Client Money Rules of the Financial Conduct Authority amounted to £52,686,945 (2022: £66,435,793). The Company has no beneficial interest in these amounts and accordingly they are not included in the consolidated statement of financial position.